I had a lovely dinner last night at a nice Mexican restaurant with a good friend who is also an accountant. We’ve known each other for years and unfortunately always have a habit of talking about finance and business together. This is fine when we are by ourselves but if our “other halves” are with us then it can get a bit boring for them.

Last night we were determined not to keep on talking about finance and all was going well until some nice tortillas arrived. Within a couple of minutes the talk had switched to perpetual bonds.

Were we crazy or was it a logical step to go from tortillas arriving to perpetual bonds?

Well, in our defense the logic behind the switch was that Gruma, Mexico’s leading tortilla maker issued some perpetual bonds a few years ago. Some students have to think hard about whether a bond without a maturity (redemption) date has a (market) value. To remove any doubt, Gruma issued USD 300 million worth of perpetual bonds.

The appetite for perpetuals is starting to spread to Asia, especially among investors in search of high-yield investments. Last year for example, the Union Bank of India (UBI) announced an issuance of such an instrument.

Back to my point of whether we were crazy or it was a logical step to go from tortillas to perpetual bonds. At the table last night two of us thought it was logical whilst the other two thought we were crazy…

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